At the March 10th meeting, look for the ECB to lower projections for growth and inflation slightly for the coming years.
This week’s key event is the European Central Bank’s meeting on March 10. Traders expect the ECB to lower projections for growth and inflation at the Thursday meeting and to take further action.
In February, eurozone inflation slipped back into negative territory, coming in at -0.2% from +0.5% in January. Core inflation unexpectedly plunged 0.3pp to +0.7%, just above the all-time low of +0.6%, reached in January 2015.
From the December meeting when the ECB announced stimulus measures that were widely perceived as less than the market expected, the eurozone economic outlook and inflation have since weakened. Additionally, leading indicators have fallen short of expectations. Draghi may not want to repeat the disappointment that took place after the December meeting so he may move aggressively.
At the March 10th meeting, look for the ECB to lower projections for growth and inflation slightly for the coming years. President Draghi is expected to emphasize that the ECB’s revised inflation assessment contains downside risks since the recent declines in headline and core inflation will likely not be incorporated in the updated projected outlook due to limitations in data-gathering.
Traders estimate that the central bank will revise down its 2016 and 2017 inflation forecasts from +1.0% and +1.6% projected in December to +0.4% and 1.4% respectively.
The ECB may also loosen or remove the deposit rate floor constraint on the purchases in the public sector purchase program (PSPP) and further broaden the universe of eligible assets than to remove the capital key or bond specific limits.
This means that rather than lowering rates further into negative territory, an unconventional method that seems to have worn out its effectiveness, the ECB may shift its focus to asset purchases by implementing a tiered deposit rate on excess reserves.
Specifically, the deposit rate may be cut by at least 10 basis points. Additionally, there may be an increase of 10 billion euros ($11 billion) to $20 billion euros in monthly asset purchases and an extension of the program.
Technically, since the revisions have been widely hinted at for several weeks, the markets may have already priced in much of the aggressive action. This may be the reason for the strong short-covering rally late last week.
If the ECB announces a more aggressive plan than traders expect and the U.S. dollar picks up strength then we may see a sell-off through last week’s low at 1.0825. This would put the EUR/USD in a position to eventually challenge the December low at 1.0539, the April 2015 bottom at 1.0520, or even last year’s low at 1.0462.
These bottoms were all reached during a strong dollar environment when the Fed was more hawkish about interest rate hikes than it is now.
If the ECB announces an aggressive plan and the market remains unclear about the direction of U.S. interest rates then the reaction by traders should be relatively mild since most of the news has already been factored into the price action. This will likely mean just another test of last week’s low at 1.0825.
Going into the report, we may see a choppy, two-sided trade on both sides of a short-term retracement zone at 1.0946 to 1.0975. After the release of the report, traders should expect better than average Volatility until the major investors can determine its longer-term impact on the euro.
The key for short-term traders will be determining how much of the report has already been priced into the market. Shortly after the release of the report, investors are going to shift their focus back to the Fed and its 2-day central bank meeting on March 15 -16.
This week’s key event is the European Central Bank’s meeting on March 10. Traders expect the ECB to lower projections for growth and inflation at the Thursday meeting and to take further action.
In February, eurozone inflation slipped back into negative territory, coming in at -0.2% from +0.5% in January. Core inflation unexpectedly plunged 0.3pp to +0.7%, just above the all-time low of +0.6%, reached in January 2015.
From the December meeting when the ECB announced stimulus measures that were widely perceived as less than the market expected, the eurozone economic outlook and inflation have since weakened. Additionally, leading indicators have fallen short of expectations. Draghi may not want to repeat the disappointment that took place after the December meeting so he may move aggressively.
At the March 10th meeting, look for the ECB to lower projections for growth and inflation slightly for the coming years. President Draghi is expected to emphasize that the ECB’s revised inflation assessment contains downside risks since the recent declines in headline and core inflation will likely not be incorporated in the updated projected outlook due to limitations in data-gathering.
Traders estimate that the central bank will revise down its 2016 and 2017 inflation forecasts from +1.0% and +1.6% projected in December to +0.4% and 1.4% respectively.
The ECB may also loosen or remove the deposit rate floor constraint on the purchases in the public sector purchase program (PSPP) and further broaden the universe of eligible assets than to remove the capital key or bond specific limits.
This means that rather than lowering rates further into negative territory, an unconventional method that seems to have worn out its effectiveness, the ECB may shift its focus to asset purchases by implementing a tiered deposit rate on excess reserves.
Specifically, the deposit rate may be cut by at least 10 basis points. Additionally, there may be an increase of 10 billion euros ($11 billion) to $20 billion euros in monthly asset purchases and an extension of the program.
Technically, since the revisions have been widely hinted at for several weeks, the markets may have already priced in much of the aggressive action. This may be the reason for the strong short-covering rally late last week.
If the ECB announces a more aggressive plan than traders expect and the U.S. dollar picks up strength then we may see a sell-off through last week’s low at 1.0825. This would put the EUR/USD in a position to eventually challenge the December low at 1.0539, the April 2015 bottom at 1.0520, or even last year’s low at 1.0462.
These bottoms were all reached during a strong dollar environment when the Fed was more hawkish about interest rate hikes than it is now.
If the ECB announces an aggressive plan and the market remains unclear about the direction of U.S. interest rates then the reaction by traders should be relatively mild since most of the news has already been factored into the price action. This will likely mean just another test of last week’s low at 1.0825.
Going into the report, we may see a choppy, two-sided trade on both sides of a short-term retracement zone at 1.0946 to 1.0975. After the release of the report, traders should expect better than average Volatility until the major investors can determine its longer-term impact on the euro.
The key for short-term traders will be determining how much of the report has already been priced into the market. Shortly after the release of the report, investors are going to shift their focus back to the Fed and its 2-day central bank meeting on March 15 -16.
James A. Hyerczyk is a financial analyst for FX Empire, a leading financial portal. James has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann. James A. Hyerczyk is a senior analyst at FX Empire. He has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.
Interactive Brokers Expands Offerings with Daily Options on French Stocks
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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